Saturday 15 March 2014

Panasonic to make India regional hub

India may be reeling under growth pangs and severe structural issues but that hasn't stopped Japanese electronics giant Panasonic from putting India bang at the centre of its global strategy. The Osaka-based, $76-billion company has decided to make India its regional hub to service the subcontinent, Middle East and Africa. It is also moving one of its top honchos — Yoshihiko Yamada — to be headquartered in New Delhi to directly take care of these regions as also create synergies between India, Asean and China.

Besides, India will now be developed as the hub for product development, R&D, business solutions and would also serve as the global sourcing base for mobile phones, the production of which has been discontinued lately in Japan, as part of a global restructuring.

"India will be the second version of Panasonic Corporation as it has a huge potential and is the most promising country from future growth perspective because markets in the US, Europe and Japan have matured. We look at India from two perspectives, one from a capability creation and the other from a region perspective. India, Asean and China have been categorized as strategic regions and we see India on the top now from a business perspective," Kazuhiro Tsuga, global president of Panasonic Corporation, told TOI in an exclusive interview, unveiling what is being seen as the second chapter of both its India story and its global business. The company describes the first version as the process of its formation in 1918, when its founder encountered the same conditions in Japan that are prevalent in India today.


The new region headquartered in India would be only Panasonic's sixth such region globally. India was earlier housed under the Asia-Pacific, Middle East and Africa region.

Though present in India for about 40 years now, with a clutch of seven companies manufacturing an entire range of electric equipment from TVs to batteries, the interest has been rather sporadic. Tsuga, who is now restructuring the global operations after spiraling losses, said that India by 2015 will contribute 3.5% to the global turnover, up from 2% now.

As part of the global restructuring, which came on the back of $15 billion in losses over the last two financial years, Tsuga — who has been at the helm for a similar period about two years now — will transform the company globally from a consumer maker to a supplier for other businesses. In effect, this means that the focus globally will shift from B2C to B2B. "However, the focus in India would continue to be on consumer products," Tsuga said.

As part of this global restructuring, he pulled out of the smartphone business in Japan, trimmed circuit boards businesses and sold semi-conductors, and got out of plasma TVs too. The company has also decided to close down businesses which do not throw up operating margins above 5%. The restructuring appears to have yielded results already after Panasonic posted a third-quarter profit recently, which was 68% higher than analyst estimates. The company's stock also surged the most since 1974.

In India, too, the focus has been beneficial. Panasonic has increased its market share in the AC segment to 15% and in TVs to 9%, making it the third and fourth largest player in the industry, taking on entrenched and aggressive Korean competition.

Earlier this year, Panasonic set up the India business development centre to focus on the challenges in rural India like clean water, food issues, remote services like tele-education and telemedicine, and providing power to off-grid population. The centre would develop products and services which could be adopted globally.

The company now plans to be an aggressive player in India, focused on expanding existing portfolio and creating a strong lineup of entry products, including smartphones for which it would create robust products focused on local needs and insights. Besides, Panasonic also wants to target the lifestyle segment and B2B businesses, including security and surveillance solutions. It sees 4G services as a catalyst for offering security services to homeland security.

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